Ummeed Housing Finance Pvt. Ltd has raised Series B funding of $5.6 million (Rs 36 crore) from existing investors Lok Capital Growth Fund and Duane Park, the mortgage lender said in a statement.
The funding comes after the Delhi-based company raised its first institutional round of $3.5 million from Lok Capital and Duane Park in October 2016. Since then it has established three branches—in Delhi, Chandigarh and Jaipur—and has about Rs 20 crore of assets under management (AUM).
The fresh round of investment will help the company expand in new locations in northern and central India. It will also invest in social, mobile, analytics and cloud technologies and aims to grow its AUM six times to Rs 120 crore by March 2018.
The company targets to go paperless, deploying tablets in all its branches to study customer profiles, run algorithms for credit scoring and disburse loans at a faster pace.
Ummeed was founded in January 2016 by Ashutosh Sharma, who had spent 25 years at Citi, HSBC and Bank of Montreal. The company provides housing finance to families with low and informal income. It offers loans ranging from Rs 3 lakh to Rs 25 lakh for purchase of apartments, construction of homes, home improvement, home extension and loans against property.
“Ummeed is ready for scale. We will strengthen our fintech and move towards becoming a mobile platform. We aim to build scoring modules that can improve operation efficiencies, reduce turnaround time and build robustness around the credit quality of the portfolio,†Sharma said.
Meanwhile, Ummeed is Lok Capital’s maiden investment from its third fund, Growth Catalyst Partners, and the third investment in this sector.
The impact investment firm had earlier backed Aptus Value Housing Finance and SEWA Grih Rin. Lok Capital manages three funds with over $125 million under management.
Several housing finance companies have been looking to grow business and loan portfolios by consolidating their market share in the affordable housing segment. These firms have seen keen interest from private equity players.
According to a Monitor-Deloitte study commissioned by the World Bank and the National Housing Bank, the potential of the Indian affordable housing finance segment is Rs 8.8 trillion (about $135 billion). Moreover, government policies like Pradhan Mantri Awas Yojna, promoting affordable housing, is likely to provide further impetus to the segment.